OTC Suspensions, Ghana Listing, BofA Salaries: ComplianceCarla Main
The U.S. Securities and Exchange Commission suspended trading in 255 dormant shell companies “ripe for abuse” in the over-the-counter market as part of “Operation Shell-Expel,” an effort to fight fraud in the microcap market, the agency said in a statement.
The suspended stocks, from 26 states and two foreign countries, can’t be relisted unless the companies provide updated financial information to prove they’re still operational.
So-called pump-and-dump schemes “are among the most common types of fraud involving microcap companies,” the SEC said. Dormant shells are a frequent element in the schemes, Andrew Ceresney, director of the SEC Enforcement Division, said in the statement.
Former Morgan Stanley Banker Seeks to Expand Japan Crowdfunding
Osamu Ito, a former Morgan Stanley MUFG Securities Co. banker, is setting up a crowdfunding company that will raise money online to invest in startups.
Ito, 34, left the brokerage yesterday to become chief executive officer of Tokyo-based Crowdfunding Inc. He joins a growing trend globally of crowdfunding websites that allow businesses too small to attract banks or venture capitalists to seek finance for specific projects and raise money from a large number of individual contributors. Crowdfunding platforms raised an estimated $5.1 billion in 2013, compared with $2.7 billion in 2012, according to Crowdsourcing LLC’s research website Massolution.
A working group under Japan’s Financial Services Agency has been discussing ways to lower barriers for crowdfunding platform operators that are required to be registered with the regulator, while protecting potential investors interested in such investments. Entrepreneurship in Japan was about half the level in the U.S. in 2010, partly because of a lack of risk-money to support nascent businesses.
Ghana Regulator Close to Approving Mega African Capital Listing
Ghana’s Securities and Exchange Commission is close to approving the initial public offering of investment company Mega African Capital in what would be the West African nation’s first listing in more than six years.
SEC Director General Adu Anane Antwi didn’t give a specific timeframe.
Mega African Capital is a “long term private investment company,” that “targets high net worth individuals looking for African opportunities,” according to a statement on the website of Oak Partners Ltd., an investment-management partnership in West Africa.
The commission is working on regulation for credit-ratings companies, Antwi said from Accra yesterday.
Justice Joins Bribery Probe Involving Libya Fund, WSJ Says
The Justice Department joined a widening investigation of banks, private-equity firms and hedge funds that may have violated antibribery laws in their dealings with Libya’s government-run investment fund, the Wall Street Journal reported, citing people familiar with the matter without identifying them.
The criminal investigation is proceeding alongside a civil probe by the Securities and Exchange Commission that began in 2011, the newspaper reported.
U.K. Treasury Panel Head Says Some Banks Rewarded Risky Behavior
The U.K. Treasury Select Committee’s Andrew Tyrie said in e-mailed statement that some banks’ “remuneration structures encouraged behavior which added great risk to the financial system.”
Tyrie made the comments in a written statement sent to Financial Conduct Authority Chief Executive Martin Wheatley before an evidence session on the failure by Lloyds Banking Group to control how it rewarded its sales teams.
“Incentives have been deeply misaligned for significant numbers of front-line staff, not just highly remunerated traders or the most senior executives. Deep cultural change is needed,” Tyrie wrote. He urged the FCA to reconsider taking action on the topic.
Wheatley is to give evidence to the committee today.
Comings and Goings/Executive Compensation
Bank of America Said to Lift Salaries for Some Senior EU Staff
Bank of America Corp. is increasing salaries for some managing directors at its investment bank in the European Union by about 20 percent to $500,000, according to a person with knowledge of the plan.
The raise in base pay for managing directors is effective immediately and comes amid tougher EU rules on bonuses in the region, said the person, who asked not to be identified.
European regulators are preparing to outlaw bonuses that are more than twice fixed pay to prevent risk-taking. Banks are looking for ways to sidestep the stricter EU bonus rules on compensation, which will apply to awards given in 2015, based on this year’s performance.
Lenders will be able to ask national regulators to exempt staff earning as much as 1 million euros ($1.3 million), the European Banking Authority said on Dec. 13. The EBA would have to approve any such waiver.
Victoria Garrod, a spokeswoman for Bank of America in London, declined to comment.